Higher rice prices push Feb. inflation to 4.1%

A rice retailer fixes his products in his store in Manila on Wednesday. Rice prices in the Philippines have risen for six straight weeks. PHOTO BY RENE H. DILAN

Higher rice prices helped push inflation up to 4.1 percent in February from 3.4 percent a year earlier, official statistics show, but the central bank says the full-year target remains intact.

The National Economic Development Authority (NEDA) traced the acceleration in the inflation rate to higher rice prices, although the upward pressure was slightly moderated by the slowdown in tobacco and alcoholic beverages due to the ‘Sin Tax’ law.

“The supply outlook for rice, however, in the coming months is quite favorable suggesting that prices may be on the way down,” Socioeconomic Planning Secretary Arsenio Balisacan said also on Wednesday.

The higher inflation rate, released by the Philippine Statistics Authority (PSA) on Wednesday, is also seen putting pressure on banks to raise interest rates, which may affect property prices.

“Interest rates are pressured to go up. In terms of the market, [there would be impact on]banks and property-related companies as their buyers tend to depend on lower prices,” First Grade Finance Managing Director Astro del Castillo told The Manila Times.

But on a monthly basis, the PSA and the NEDA said that the February inflation rate of 4.1 percent was slightly lower than the 4.2 percent recorded in January due to a deceleration in the movement of commodities, transport and petroleum products prices in February.

Given that the inflation rate in February is slightly lower than that in January, del Castillo said that there is “no need to panic.”

BSP Governor Amando Tetangco said the central bank is positive that the headline inflation for this year would still be within the government’s target of 3.2 percent to 4.6 percent.

“We will continue to monitor global developments, especially as these impact investor sentiment and domestic financial markets, and any spillover effects that might result in volatility in international commodity prices. We will also be watchful of trends in domestic liquidity and lending,” he said.

“We will make adjustments to policy levers as appropriate to ensure that liquidity continues to be channeled to productive sectors of the economy and that inflation expectations remain well-anchored,” the central bank chief added.